Pollis: Is the market rational for MLB front office employees?

From SABR member Lewie Pollis at Baseball Prospectus on March 6, 2014:

The following is an excerpt from the author’s senior thesis at Brown University. He will be presenting his research at the Society for American Baseball Research Analytics Conference on March 15. The full paper will be made available later this spring.

Anyone who’s read Moneyball knows the story. At the end of the 2002 season, Billy Beane and Paul DePodesta arranged to trade Beane to the Boston Red Sox in exchange for two minor-league players, including Kevin Youkilis. To most teams Youkilis was an unexceptional minor leaguer with an unathletic body and no noteworthy skills, and it is probably fair to say that few in the game outside of Boston and Oakland saw any promise in him. Youkilis ended up developing into a very good player and went on to thrive with the Red Sox for years, but it is striking that the cost of a GM with the ability to identify a hidden gem like Youkilis was two minor league players in whom most of the rest of the league saw little value.

Though Beane ultimately decided to stay in Oakland, the episode remains a fascinating illustration of how MLB franchises value the people who put their teams together relative to the players they acquire. Those inside the Athletics’ front office knew better than anyone how important Beane was to the organization, yet DePodesta agreed to receive a pair of unproven minor league players in exchange for the man who had built the entire operation. In other words, one of the game’s then-premier experts on inefficiencies in the market for players had no qualms about trading the goose for a single golden egg. According to Michael Lewis, Beane was fully aware of what was happening in the deal: “He could see only one way to exploit this grotesque market inefficiency: trade himself.”

Nine years later, Theo Epstein found himself in a similar situation. Faced with internal discord after the Red Sox suffered an historic collapse at the end of the 2011 season, Epstein left Boston to accept a job as President of Baseball Operations with the Chicago Cubs—thus raising the question of a top baseball executive’s value again. Some speculated that the Red Sox would demand Trey McNutt, the Cubs’ top prospect, in exchange for Epstein. However, they eventually settled for two less prestigious players, and at the time most analysts seemed to agree that Chicago needed not give up a top prospect in exchange for a non-player.